Which of the Following Is True About Small Service Companies

question 27

Multiple Choice

Which of the following is true about small service companies?

• A) The owner prefers to start the company from a rented office.
• B) They should be located away from the city, where rental space is too costly.
• C) They cannot take their activities "on the road" to obtain more income.
• D) They have some characteristics of both retailers and producers.

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Definitions:

Financial Statements

Structured reports that detail the financial performance of an organization, typically including the balance sheet, income statement, and cash flow statement.

Depreciation Expenses

The allocation of the cost of tangible assets over their useful lives, recognized as an expense on the income statement.

Retained Earnings

Profits that a company chooses not to distribute as dividends to shareholders but instead reinvests in the business or keeps as reserve.

Depreciation

A technique for distributing the expense of a physical asset across its lifespan.